0000817720-26-000017
SEC filingRevenue grew 13.2% YoY to $302.5M, but gross margin declined 220bps to 43.5% due to acquisition amortization.
Net revenue for the second quarter of fiscal 2026 was $302.5 million, a 13.2% increase from $267.2 million in the same period last year. Gross margin declined to 43.5% from 45.7%, a 220 basis point decrease, primarily due to higher amortization of intangible assets acquired in the Broadcom transaction, partially offset by accretive IP license revenue. Operating loss improved slightly to $(15.1) million from $(15.2) million as higher research and development expenses—driven by headcount additions from Broadcom and increased stock-based compensation—were offset by the revenue growth. Net income swung to a loss of $(14.8) million from a profit of $1.8 million in the prior year, largely due to the absence of significant one-time tax benefits recognized in the prior-year period.
Revenue growth was led by Core IoT product applications, which surged 52.5% YoY to $93.2 million, representing 30.8% of total revenue (up from 22.9%). This was driven by a 32% increase in units sold and a 9.6% increase in average selling prices, reflecting the contribution from the Broadcom acquisition. Enterprise and Automotive revenue rose modestly by 1.3% to $161.1 million (53.3% of revenue), primarily due to higher license revenue; excluding licenses, revenue would have declined year-over-year as units fell 8.2% and ASPs decreased 1.3%. Mobile product applications grew 2.6% to $48.2 million (15.9% of revenue), with a 14.5% increase in units offset by a 10.4% decline in ASPs due to product mix.
Management highlighted ongoing macroeconomic uncertainties, including tariff policies and memory component availability, but noted no material near-term impact from tariffs based on current lead times and order activity. The company continues to focus on its Edge AI strategy and integrating the Broadcom acquisition. While no specific revenue or earnings guidance was provided, the increase in inventory ($18.4M) indicates preparation for anticipated demand in wireless products in the second half of fiscal 2026. The cash position of $437.4 million and $350 million available under the revolving credit facility provide liquidity flexibility, though the company has $850 million in long-term debt.
As of December 27, 2025, Synaptics held $437.4M in cash and cash equivalents, with no short-term investments. The company’s total debt stood at $836.0M (carrying value), consisting of $400M 4.00% 2029 Notes and $450M 0.75% 2031 Convertible Notes. Inventory increased to $158.0M from $139.5M in June 2025. Deferred revenue (contract liabilities) was $7.4M, down from $16.2M at June 2025.
Total purchase commitments amounted to $29.0M, primarily for inventories and IP license agreements, with $15.1M due within the next twelve months and $13.9M in fiscal 2027-2028. The company also had $42.9M in gross unrecognized tax benefits for which the timing of cash settlement cannot be reliably estimated.
During the six months ended December 2025, Synaptics repurchased $43.6M of common stock (including excise tax), leaving $106.4M remaining under the $150.0M stock repurchase program. No dividends were paid. The company did not issue or repay any debt during the period (aside from amortization of issuance costs). Capital expenditures are not disclosed in the Notes but are reported in the cash flow statement.
The company operates as a single segment. Revenue by product category for Q2 FY2026: Enterprise & Automotive $161.1M, Core IoT $93.2M, Mobile $48.2M. Geographic revenue (billing location) was led by China/Hong Kong $144.1M, Taiwan $86.2M, and Japan $28.9M. Three customers each represented over 10% of revenue.
Operating cash flow (CFO) of $60.0M significantly exceeded the net loss of $35.4M, indicating strong cash generation from operations despite the loss. The primary driver was the add-back of non-cash charges: share-based compensation ($75.4M), depreciation ($15.1M), and amortization ($69.2M), totaling $159.7M. However, working capital consumed $60.3M, notably an increase in accrued liabilities ($35.7M) and inventories ($18.4M).
Capital expenditures (capex) rose to $23.8M, up 72% year-over-year, reflecting increased investment in property and equipment. Despite this, CFO covered capex by 2.5x, providing ample liquidity. The company also returned $43.6M to shareholders via share repurchases, funded largely by CFO and investing cash inflows from investment maturities ($61.0M).
Financing activities were dominated by share repurchases and net share settlement of equity awards, with no new debt issuance. The overall cash position increased by $45.9M to $437.4M. Key anomalies include the large swing in accrued liabilities and the receipt of intangible assets from advance payments ($42.5M non-cash).